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Stocks May Find Traction in Wal-Mart Report, Inflation Data

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November 17, 2015

Stocks are positioning for a stronger start Tuesday as Wall Street looks to slap together back-to-back gains after tough trading last week.

Potential stock drivers were far flung. European equities were in the middle of their strongest session in weeks. Oil prices rebounded on Monday driven in part by news of French strikes in Syria and possible disruption to oil distribution (it’s down again Tuesday). The dollar hit a fresh, seven-month high against the euro. As for domestic drivers, better-than-expected quarterly results from Wal-Mart Stores (WMT) as well as traction within one inflation reading could prove stock-positive today.

FIGURE 1: BIG BOUNCE.

The S&P 500 (SPX), charted here on the new-look thinkorswim® platform answered Friday’s snapped weekly win streak with a sizeable Monday bounce, pushing back above 2050. Data source: Standard & Poor’s. For illustrative purposes only. Past performance does not guarantee future results.

Hint of Inflation? The consumer price index (CPI) posted the first increase in October in three months, but overall U.S. inflation remained extremely low. The CPI rose by a seasonally adjusted 0.2% last month. Importantly, from October 2014 to October 2015, consumer inflation has risen a scant 0.2%. Excluding food and energy, so-called core consumer prices rose 0.2% in October. Over the past 12 months, core prices have climbed 1.9%. Real, or inflation-adjusted, hourly wages have climbed 2.4% in the past 12 months—still at a pace unexpected given the age of the economic recovery.

Select Retailers Deliver. Wal-Mart Stores (WMT) shares gained saying its fiscal Q3 profit declined less than Wall Street expected. That helped offset a slight miss in revenue of $117.41 billion. Home Depot (HD) shares gained after the DIY retailer issued results that included relatively upbeat guidance. HD backed the high end of its previous forecast for the full year.  

Rocky Trading for Crude. Crude for December delivery  was off 1.1% on Tuesday, erasing a similar-sized rebound in Monday’s trading session, a move that helped drive stocks higher to start the week. Upcoming supply data and an unfolding reaction to the French attack last week are drivers in the oil market, traders report. French airstrikes in Syria increased concerns about Middle East supply disruption, boosting oil on Monday. But attention likely returned to the abundance of overall supply during early Tuesday trading.

Good trading,

JJ

@TDAJJKinahan

  

FIGURE 2: ECONOMIC AGENDA.

This week’s U.S. economic report calendar. Source: Briefing.com.

JJ Kinahan

JJ began his career in 1985 as a Chicago Board Options Exchange...

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